Pensions Bill

I am sympathetic to the aim of the amendment, which is to ensure thatthe concerns about levelling down are appropriately focused on in government. I am less convinced that it is necessarily a responsibility of the delivery authority itself. We should keep the importance of preventing levelling down before us, but also in context. The fact is that 56 per cent of the private sector workforce have no provision other than that provided by the state,so we want to ensure a balance between bringing that 56 per cent up to some minimum level and the danger that there might be a levelling down of a subset of the 44 per cent towards the new standard level. It is important to realise that it is quite difficult, within the design of the national pensions saving system, to avoid that danger, which is not created by the specific administrative arrangements of the scheme—by whether it is organised, as the ABI wanted, through insurance companies, or, as the NAPF wanted, through competing trusts, or, as the commission proposed and the Government are taking forward, through an overall national agency. The danger is created not by those particular choices but by the actual declaration of what is an absolute minimum standard. The moment we say that the absolute minimum the employer must do is to put in its 3 per cent—if people accept automatic enrolment and pay their 5 per cent—in itself creates the danger of levelling down. It is incredibly important to try to prevent that levelling down. The commission thought about the levers that might prevent that—first, in maintaining a significant element of tax relief incentive towards the provision of pensions beyond the minimum. That is a separate issue from the one which I knew the noble Lord, Lord Oakeshott, would mention if I did not—the allocation of tax relief between different people—but certainly the overall existence of tax relief is very important. Secondly, it is very important better to communicate to individuals and companies just how generous tax relief is, and that it applies not only to income tax but to the favoured treatment of employer's national insurance when you pay someone through an employer's pension contribution rather than through cash wages. The levers which we could think of for ensuring that there was not levelling down were the preservation of the existing generosity of tax relief and of employer's national insurance relief together with a programme of communication to employers and employees to ensure that they are convinced that being paid in pension contributions rather than cash wages is a sensible thing to do. I think that thoseare very important objectives. I am just not totally convinced that they are objectives that would be pursued by the delivery authority of the national pension savings scheme itself rather than by other wings within government.